Russia had introduced a mechanism of forced redomiciliation of economically significant organizations in 2023 (Federal Law No. 470-FL dated 4 August 2023). In March 2024, the Russian Government approved a list of economically significant organizations, allowing claims to suspend the corporate rights of foreign holding legal entities in these companies.
A month later, in April 2024, the Arbitrazh Court of the Moscow Region upheld the Ministry of Industry and Trade’s application to suspend the corporate rights of Dutch X5 Retail Group concerning the retailer's Russian subsidiary, OOO Corporate Center X5.
The decision stipulates that non-Russian depositary receipt holders and beneficiaries will be entitled to receive shares in the subsidiary proportional to their ownership interest in X5 Retail Group, while Russian depositary receipt holders and beneficiaries will be obliged to accept such shares. In compliance with legal requirements and to distribute the shares, OOO Corporate Center X5 will initiate the process of reorganization into a public joint stock company, followed by listing on the Moscow Exchange.
This case of forced redomiciliation is not isolated. At the end of April 2024, a court suspended the rights of Demanor Investments Limited, a Cyprus-based company that owns the Azbuka Vkusa retail chain. In mid-May 2024, the corporate rights of ABH Financial Limited and Alfastrakhovanie Holdings Limited were suspended in relation to AB Holding-Alfa Bank and UNS-Holding-Alfa Insurance.